Babcock v. Murray

58 Minn. 385 | Minn. | 1894

Collins, J.

There seems to be no controversy over the leading facts pertaining to this case. Courtlandt Babcock, a son of plaintiff, and Richard Deming, had been engaged in business together at St. Paul, loaning money on chattel security, for a few months prior to March 1, 1887. For two years after the date just mentioned, Deming was doing business for himself, and during this time he married a daughter of defendants Murray. He died prior to the commencement of this action, and defendant Deming is his widow. The capital used by Deming in his business was principally plaintiff’s, placed in his hands on different dates in the year 1887, under an agreement that he would loan it in her name, and return the principal intact, with interest at the rate of 8 per cent, per annum. All of plaintiff’s business with Deming was transacted by Courtlandt Babcock as her agent, and it was found by the court that during the year 1887, and while plaintiff’s money was being furnished to Deming, he entered into an agreement with Courtlandt Babcock whereby the latter was to be paid 12 per cent, per annum on all sums of money so furnished. About March 1, 1889, plaintiff called upon Deming to account for $9,000, which he had received. It was agreed that this sum had been placed in his hands, and it was also agreed that, in addition to a cash payment of $1,000 and the execution and delivery of a note for a like amount, signed by himself and wife, Deming should cause to be executed and delivered to plaintiff, and payable to her order, seven promissory notes, signed by bimself, his wife, and Mr. and Mrs. Murray, each for $1,000, and secured by a mortgage upon a certain tract of real estate owned by Mrs. Murray. The plaintiff was then to transfer to Deming all notes and mortgages acquired for her in his loan business, estimated value about $7,000. The notes, seven in number, and the mortgage, were executed by Mr. and Mrs. Murray, and placed in Deming’s hands, on his representation and in the belief by them that Courtlandt Babcock was a copartner in Deming’s business, and that they were to be used by the latter to buy out such partnership interest. Before delivery to plaintiff, but without the knowledge or consent of Mr. and Mrs. Murray, Deming and his wife placed their names on the back of each of said notes. It was found by the court that Deming wrongfully and fraudulently diverted said notes and mortgages from the purposes for which they were delivered to him by Mr. and Mrs. Murray, but it was also found that plaintiff was ignorant of the representations made by Deming, which induced them to make and sign the notes and mortgage, and had no knowledge of their intention and purpose when placing them in Deming’s hands. She received the notes and mortgage from Deming, executed and delivered as agreed upon, and thereupon transferred to him the notes and mortgages which he had taken for her in his loaning business. The first of this series of notes to mature was paid by Deming. This action was brought to recover the amount due on- the second note. The defense set up in the answer was that plaintiff, through false representations made by Deming, fraudulently obtained the notes and mortgage from Mr. and Mrs. Murray, and that they were wholly without consideration, the fraud used and practiced being fully detailed. Usury was not intimated in the answer; nor was the agreement made in 1887, between Courtlandt Babcock and Deming, referred to; nor was it alleged that there had been a material alteration of the notes, after their execution by Mr. and Mrs. Murray. Upon findings of fact, judgment was ordered, annulling and canceling the notes and mortgage, and from the judgment entered plaintiff appeals.

It is obvious that the decision of the court below was placed upon the grounds — First. That, because of the transaction between Deming and plaintiff’s son, the original contract, under which the former received the money, was void, and usurious, and hence that, when the notes and mortgage were executed and delivered, plaintiff had no enforceable claim against Deming. As a consequence, the usurious claim of plaintiff constituted no lawful consideration for such execution and delivery. And, second, that there was a material alteration of the notes when, after the execution by the Murrays, Deming and his wife placed their names upon the backs, thus becoming original makers.

Conceding that the evidence was sufficient to justify the court below in finding that there was an agreement between the plaintiff’s son and Mr. Deming, whereby the former was to receive 12 per cent, as interest on such sums of money as were placed in the latter’s possession, — and of this there is very grave doubt, — such evidence was wholly inadmissible under the pleadings. The defense interposed was not an illegal, usurious consideration for the execution and delivery of the notes, but a total want of consideration, the facts on which the claim was based being specifically stated. The defense of usury was not even hinted at in the answer; and, when objection was made by plaintiff’s counsel to the introduction in evidence of the writing on which the court predicated its finding that the original contract was tainted with usury, defendants’ counsel admitted that their purpose in offering it was simply to establish a date which they regarded as of importance to their clients. The record clearly discloses that at no time during the trial did counsel for either party claim that an illegal consideration was the foundation of the notes, or that the question of usury had to do with the result. The finding was not within the pleadings, and not warranted by them, or by the conduct of the parties on the trial in litigating voluntarily a question not within the issues.

The conclusion of the court that there was a material alteration of the notes, which vitiated them in plaintiff’s hands, was not warranted by the pleadings or by the facts as found. The act which, in the view of the court, constituted a material alteration of the notes, and rendered them void, was the placing of the names of Mr. and Mrs. Deming on the back of the notes after they had been executed by defendants Murray, but prior to their delivery to plaintiff. There was no allegation in the answer under which it could be claimed that proof of an alteration was admissible. The answer expressly admitted that defendant Winnifred Deming' was a maker of the note, and as to whether Richard Deming was a maker defendants denied on information and belief; while the facts as shown and actually found were that, after Mr. and Mrs. Murray signed the notes, they delivered them into the hands of Richard Deming, to be delivered to plaintiff with the mortgage, and that, while in his hands and prior to delivery to plaintiff, his own name and that of his wife were subscribed, as before stated. The defendants Murray intrusted the notes to Deming, for delivery to plaintiff; and it is well settled that their validity could not be affected by the fact that he then signed the notes himself, and procured his wife to sign also. Stein v. Passmore, 25 Minn. 256; Ward v. Hackett, 30 Minn. 150, (14 N. W. 578;) Keith v. Goodwin, 31 Vt. 268; Governor v. Lagow, 43 Ill. 145; State v. Dunn, 11 La. Ann. 549.

Judgment reversed.

Buck, J., absent, sick, took no part.

(Opinion published 59 N. W. 1038.)